QUESTION 13 Imagine LLP is a small architecture consultancy firm offering 3 standardised services in the areas of Domestic Design, Retail Design and Office Design using the same personnel. Each labour hour costs the firm E80. The firm estimated that the total fixed costs will be f280,000 per quarter. The firm has made the following forecast for the next quarter: Domestic Retail Office Design Design Design Selling price (E/unit) 8,000 40,000 60,000 Variable labour cost (f/unit) 3,200 16,000 22,400 Other variable cost (E/unit) 1,000 6,000 9,600 Allocated share of fixed costs (E/unit) 2,000 12,000 20,000 Required (for every calculation clearly state your workings): a) If the firm were to provide only Domestic Designs in the next quarter, how many units of the Domestic Designs would it need to provide in order to break even? (2 marks) b) If the firm were to provide only Retail Designs in the next quarter and aimed to achieve a profit of f116,000 from this, how many units of the Retail Designs should it provide? (3 marks) c) Assume the firm will only provide Office Designs in the next quarter. How much profit / loss will the firm make if it provides 14 units of Office Designs? What is the margin of safety in % terms, if the firm plans to provide 14 units of Office Designs? (5 marks) d) Assume there is a shortage of qualified architects in the area. Therefore, the firm can only use its existing employees in the next quarter, who can work up to a maximum of 4,400 hours for that period. The firm estimates that the demand for its consultancy services in the next quarter will be as follows: 30 units of Domestic Designs; 18 units of Retail Designs; 12 units of Office Designs. What quantity of which design should Imagine LLP provide in the next quarter in order to maximise its profit? (10 marks) Question 13 continued overleaf PTOlQuestion 13 continued e) Assume that Imagine LLP can subcontract some of its services to another architecture design rm for the next quarter. State, with supporting arguments, what is the maximum price per unit of senrice {for each type of service) AND the maximum total amount that Imagine LLP can pay to subcontract the part of the work that it cannot meet internally due to its staff shortage. [5 marks} [Total of 25 marks}